In the wake of Nikons startling move... - Musings of an Antique Technophyle

In the wake of Nikons startling move...

Konica Minolta Holdings will withdraw from the camera and film businesses, marking the end to one of the best known brands in the photography world.

As part of the surprise move, the Tokyo-based company said Thursday it will sell a portion of its digital single lens reflex (SLR) camera assets to Sony for an undisclosed sum and cease production of compact cameras by March of this year.

The company said it will stop making photographic film and color paper by March 2007, pulling out of a market in rapid decline due to the spread of digital cameras, which store images digitally.

The world's third-largest maker of camera film after Eastman Kodak and Fuji Photo Film had said in November that it would significantly downsize its loss-making camera and film operations, but not completely shut them down.

"I wanted to put a clear end to the matter," Konica Minolta President Fumio Iwai said at a press conference, where the company also announced that Iwai would be replaced by Vice President Yoshikatsu Ota on April 1.

Konica Minolta said in November it expected to post a group net loss of $407.9 million (47 billion yen) in the fiscal year that ends in March.

But the decision to completely pull the plug on the business caught analysts and archrival Fuji Photo off guard.

Konica Minolta, created in August 2003 through the merger of Konica and Minolta, has a long history in the camera and film markets, producing Japan's first photographic paper in 1903 and the country's first color film in 1940.

Following the news, Fuji Photo issued a press release saying it will continue making traditional camera film.

JP Morgan analyst Hisashi Moriyama called Konica Minolta's move a "positive surprise…I was also not expecting Iwai to step down. This is a bold move rare among Japanese firms." He added that the decision could increase pressure on Fuji to downsize its business.

"I think the stock will go up. The traditional camera and film businesses were seen as a barrier to earnings growth and now it will be completely gone."

By ditching the unprofitable operations, Iwai said the company could focus resources on more promising areas such as color office copiers and LCD materials, medical equipment and optical devices.

Sony and Konica Minolta formed an agreement in July to jointly develop digital SLR cameras, which are generally more expensive and offer better performance than point-and-shoot compact models, and typically use interchangeable lenses.

Konica Minolta said it will continue to produce digital SLR camera bodies and lenses for Sony based on its Maxxum/Dynax mount system, meaning that current owners of those lenses will be able to use them on new digital SLR models to be developed by Sony.

But the Konica Minolta brand will disappear, ending a legacy that started when Konica introduced its first camera in 1903.